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October is a dangerous month to buy stocks, Mark Twain once noted, and so are all the rest. And as we head into third-quarter earnings season—and the 25th anniversary of the 1987 stock-market crash—it's worth examining where the specific risks -- and opportunities -- lie right now.

Yes, the Standard & Poor's 500 Index is up 16.2% this year, but other metrics, including revenue growth and return on equity, aren't so great. In the second quarter, S&P 500 index sales grew 3%, the lowest rate since 2009, while the return on equity was 16.5%, down slightly from the first quarter. Watch profit margins; if they fall, stocks could follow.

Optimists will note Friday's better-than-expected employment report and that the September Manufacturing ISM Report on Business was 51.5%, suggesting economic growth for the first time in three months. Pessimists will note that second-quarter gross domestic product was revised to 1.3% from 1.7%, and quote the prediction of Olivier Blanchard, the International Monetary Fund's chief economist, that the world economy won't recover until 2018.

All this imbues third-quarter earnings season with more significance than generally understood. Morose earnings reports, and pre-announcements, could influence election results.

Sosnick says Wal-Mart's stock, which has stalled since reaching an all-time high of $75 in last month, could soon hit $80 -- and $100 by 2015 as the stock advances on earnings growth and a higher dividend. Wal-Mart has increased its annual dividend, currently $1.59 for a 2.1% yield, every year since 1975. Fiscal third-quarter earnings will be released Nov. 15.

We also like financials, having argued in last week's cover story ("Built to Win") that
Goldman Sachs gs -0.033133153862083244%Goldman Sachs Group Inc.U.S.: NYSEUSD241.37
-0.08-0.033133153862083244%
/Date(1481302496193-0600)/
Volume (Delayed 15m)
:
1806115
P/E Ratio
19.166533864541833Market Cap
96012346653.2929
Dividend Yield
1.080901305396192% Rev. per Employee
959701More quote details and news »gsinYour ValueYour ChangeShort position
(GS) could rise 25% in the next year. Since then, others have embraced the sector. JPMorgan is now advising clients to buy
Bank of Americabac 0.6535947712418301%Bank of America Corp.U.S.: NYSEUSD23.1
0.150.6535947712418301%
/Date(1481302496972-0600)/
Volume (Delayed 15m)
:
45820939
P/E Ratio
19.233013755731555Market Cap
232342244198.49
Dividend Yield
1.3003901170351104% Rev. per Employee
432244More quote details and news »bacinYour ValueYour ChangeShort position
(BAC), and Credit Suisse raised U.S. banks to Outperform. Expectations are high that banks soon will increase dividends, and that their stock prices will rise because loan growth and asset quality -- two key return drivers -- will increase. Yes, we've heard this before, but this time could be different since the Federal Reserve is buying about $40 billion of mortgage-backed securities.

Banks are minting money on mortgage originations. They've lowered mortgage rates much less than the decline in their cost of money, reaping higher spreads when they sell the loans to Fannie Mae and Freddie Mac.